This article was first published in the February 2016 China edition of Accounting and Business magazine.

CFOs and other finance professionals working throughout the major markets in Asia are generally eager to digitise greater portions of their operations but may have to wait for regulators in some markets to match their digital ambitions.

The overwhelming majority of finance professionals in markets like Singapore, Hong Kong, Japan and mainland China are willing to invest greater portions of their budgets to digitise their operations in search of smoother and faster processes, according to the findings of a recent report by Robert Half.

While the process can generate great benefits for companies, it also requires them to overcome a number of hurdles both external and internal.

‘Digitisation is all about teamwork; it needs people with different skills working together to make it happen,’ says Robert Half Singapore managing director Stella Tang.

While the general push towards greater and meaningful digitisation is evident across the region, the focus of these initiatives can vary from one market to another. Finance professionals in Singapore, a market that has long enjoyed a worldwide reputation for good ethics and strong corporate governance and has highly sophisticated and very ordered financial markets, are likely to put more emphasis on how their efforts to take their information into the digital sphere can help prevent fraud. Robert Half’s survey, which included interviews with 150 CFOs from Singapore, showed that 63% of them are driving digitisation initiatives within their team to detect and prevent fraud.

‘Singapore has a global reputation for integrity and honest conduct within its business community,’ says Tang. ‘Singapore CFOs are extremely vigilant when it comes to detecting fraud. That’s why the level of fraud in Singapore is low compared to other countries. Preventing fraud is simply a higher priority for Singapore CFOs than for finance leaders elsewhere.’

While finance executives in Singapore are increasingly leveraging the benefits that digitisation initiatives such as more enterprise resource planning and other innovative technologies to limit their exposure to fraud and strengthen internal audit processes, their peers in other Asian markets are more focused on other advantages of this shift towards greater digitisation of corporate processes and information.

In Hong Kong, another important global financial centre, the focus is less on fraud and more on the management of the vast amounts of information that digitisation invariably generates. Hong Kong not only has ambitions to cement its position as a global financial centre but also to evolve as a global hub for data analytics. These dual goals go a long way towards explaining why more than half of the financial professionals surveyed by Robert Half say that the focus of their digitisation efforts is managing big data.

Benefits are almost immediate

When successful, the benefits of these efforts are almost immediate for companies. ‘Now, we can get our daily updated cash balance automatically, which can provide a better picture for our finance team to do data mining,’ says Julian Leung Ho Yan, CFO of Hong Kong-listed Yongsheng Advanced Materials, a fabric manufacturer.

‘This makes it easier and quicker for us to be aware of the potential risks from our suppliers or customers who are not doing well, for example, who always delay the payment. Before, we only did cash balances manually twice a week; many problems or risks could not be reflected by the numbers on time.’

Like many other corporates in Hong Kong, Yongsheng operates both in the city and in mainland China. The company’s headquarters are in Hong Kong but its production facilities, suppliers and customers are all located on the other side of the border. Before digitising, the company would spend vast quantities of staff and executive time – from line staff to the CEO – reviewing and authorising payments.

‘Before, we might spend one to two weeks, which is time consuming and will turn to costs at the end,’ says Leung.

With a better payment management system in place, everyone involved in a corporate process can log in through a computer or mobile device to track and approve purchase orders, payments and other transactions, regardless of whether they are in the company’s manufacturing plant in Hangzhou or in the headquarters in Hong Kong.

‘We can save travelling time and we do not need to send all the paper documents over to China,’ says Leung. ‘We can now wrap it up in around one or two days.’

Vincent Lai, CFO and executive director at Wah Kwong Maritime Transport Holdings, agrees that this ability to better coordinate work among various departments and to facilitate more efficient financial reporting are definite benefits of digitisation. Other benefits include the support for analytics that converting information and data into a digital format can provide as well as smoother and faster accounting processes.

‘A shared digitised system in the organisation enables the finance side to get data automatically and directly from the business side – for example, the sales and marketing departments,’ says Lai. ‘Meanwhile, when we file financial reports and analysis to top management, we do not need to hold piles of files with numbers personally.’

Despite these widely accepted benefits, digitisation is not always smooth. The hurdles often have less 
to do with the intentions of a »
particular company and more with the requirements and willingness of regulators to support the process.

It takes two to tango

While in Singapore and Hong Kong this shift towards widespread digitisation is well under way, progress elsewhere in Asia is much slower. A case in point is mainland China, where there is no shortage of finance professionals, CFOs and companies willing to invest in more digital tools to facilitate data analytics, risk management, compliance and regulation but are now waiting for regulators to catch up.

‘It takes two to tango for digitisation of finance to be successful in China: the government and corporations,’ says Ian Ng, CFO of China-based GE Transportation of GE Transportation. ‘The China government must first adopt the digitisation of finance so as to enable corporations’ own digitisation to run more smoothly.’ For instance, issuing [value added tax] invoices is still done using a manual process.

There have been various discussions within the tax bureau on rolling out electronic VAT invoices but we are yet to see that,’ says Ng. ‘Based on my personal prediction, it will take another 10 years to see that digitisation of finance will be a big hit in China, correlated with the aging population.’

As they move forward with their digitisation efforts, CFOs in the region may find that new challenges emerge both from regulators and from other functions within their own companies. Still, CFOs generally agree that it is up to them to take the first steps forward rather than wait for authorities to drive the shift. And in order to take the first steps, companies and their CFOs need to have the right talent on board. ‘I would not call it a challenge, even though it does take time and training for us to get familiar with new systems, new platforms and new software,’ says Lai. ‘But everyone is using smartphones. It would not be that difficult.’

One way to smooth the process is to get finance teams to work more closely with members of the IT team, exposing both of them to each other and new technologies while building more respect and cooperation, says Ng: ‘As accountants, we must always be prepared to embrace new changes but, more importantly, to lead the change.’

Pearl Liu, journalist